Diversified Healthcare Trust (NASDAQ: DHC)

Sector: Real Estate Industry: REIT - Healthcare Facilities CIK: 0001075415
Market Cap 1.02 Bn
P/B 0.42
P/E 6.69
P/S 2.09
ROIC (Qtr) -2.71
Div Yield % 22.72
Rev 1y % (Qtr) 4.03
Total Debt (Qtr) 2.72 Bn
Debt/Equity (Qtr) 1.61
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About

Investment thesis

Bull case

  • Strong free cash flow of 193.27M provides 6.09x coverage of SG&A expenses 31.72M, indicating efficient cost management.
  • Free cash flow of 193.27M provides solid 0.54x coverage of operating expenses 359.14M, showing operational efficiency.
  • Strong tangible asset base of 4.66B provides 214.02x coverage of intangibles 21.78M, indicating robust asset quality.

Bear case

  • Operating cash flow of 18.69M barely covers its investment activities of 210.02M, with a coverage ratio of 0.09, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 18.69M provides thin coverage of dividend payments of (9.65M) with a -1.94 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 209.62M provide limited coverage of acquisition spending of (14.22M), which is -14.74x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 193.27M provides weak coverage of capital expenditures of (174.58M), with a -1.11 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (133.76M) show weak coverage of depreciation charges of 277.42M, with a -0.48 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the REIT - Healthcare Facilities
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 WELL Welltower Inc. 143.17 Bn 152.82 13.21 21.38 Bn
2 VTR Ventas, Inc. 38.32 Bn 152.44 6.57 13.22 Bn
3 OHI Omega Healthcare Investors Inc 9.79 Bn 37.42 11.00 4.26 Bn
4 DOC Healthpeak Properties, Inc. 9.29 Bn 18.52 5.20 10.14 Bn
5 CTRE CareTrust REIT, Inc. 8.40 Bn 26.19 17.62 0.89 Bn
6 AHR American Healthcare REIT, Inc. 6.95 Bn -212.00 3.23 1.70 Bn
7 HR Healthcare Realty Trust Inc 6.42 Bn -26.10 5.44 4.15 Bn
8 NHI National Health Investors Inc 2.58 Bn 24.34 21.93 1.11 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.60 1.24
EV to Cash from Ops. EV/CFO 10.75 24.29
EV to Debt EV to Debt 1.03 3.18
EV to EBIT EV/EBIT 10.95 14.77
EV to EBITDA EV/EBITDA 8.03 19.20
EV to Free Cash Flow [EV/FCF] EV/FCF -6.69 1.78
EV to Market Cap EV to Market Cap 2.77 1.96
EV to Revenue EV/Rev 5.78 11.43
Price to Book Value [P/B] P/B 0.42 2.64
Price to Earnings [P/E] P/E 6.69 29.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -36.48 -1.90
Dividend Payout Ratio % Div Payout % (Qtr) -2.70 299.46
Dividend per Basic Share Div per Share (Qtr) 0.04 1.85
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 4.98 49.00
Interest Coverage Int. cover (Qtr) -0.62 2.08
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 209.85 -326.40
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -19.81 31.24
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 12.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 16.36 35.66
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 1.43 12.40
EBIT Growth (1y) % EBIT 1y % (Qtr) 16.52 25.81
EBT Growth (1y) % EBT 1y % (Qtr) 8.81 71.96
EPS Growth (1y) % EPS 1y % (Qtr) 8.70 29.36
FCF Growth (1y) % FCF 1y % (Qtr) 368.05 -181.35
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.07 13.29
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.33 0.17
Cash Payout Ratio Cash Payout (Qtr) -0.06 0.07
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 1.61 4.36
Interest Cover Ratio Int Coverage (Qtr) -0.62 2.08
Times Interest Earned Times Interest Earned (Qtr) -0.62 2.08
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 9.30 55.93
EBIT Margin % EBIT Margin % (Qtr) -8.70 28.99
EBT Margin % EBT Margin % (Qtr) -22.82 13.55
Gross Margin % Gross Margin % (Qtr) 17.60 71.26
Net Profit Margin % Net Margin % (Qtr) -22.90 13.18